>From: "Ira Meislik" <imeislik@meislik.com>
>Professor Pat:
>The following case summary has the same kind of "smell":
>Mortgage Electronic Registration Systems, Inc. v. Wilson
>2005 WL 1284047 (N.J. Super. Ch. Div. 2005) (Unpublished)
>October 31, 2005
>MORTGAGES; EQUITABLE MORTGAGES - Even though a note is executed by only one
>joint property owner, where the joint owners used the property to secure the
>money lent by a mortgagee, and the money is directly used to purchase the
>property, both owners should be held responsible for the debt because both
>benefited from the loan.
>A woman executed a note and mortgage and then defaulted under the terms of
>the note.  The mortgagee filed to foreclose.  It then discovered that, at
>the loan closing, the property had been deeded to the borrower and the
>borrower's husband.  It then served the borrower's husband with a summons
>and complaint and received no responsive pleading.  It argued that because
>the husband "ha[d] enjoyed the same use of the funds as [the borrower] ...
>[he] gained a benefit from the use and enjoyment of the mortgage proceeds."
>It pointed out that had it, the mortgagee, not advanced the funds, the
>husband and wife would not have acquired title to the property.  Its logic
>was that the husband "should not benefit and [the mortgagee] should be
>permitted to enter judgment based upon the theory that an equitable mortgage
>ha[d] been created." It pointed out that its intent was to grant the
>purchase money mortgage and that although the husband "did not sign the
>mortgage it should not change the outcome." The Court reviewed relevant case
>law, and agreed that "the way in which the parties agreed to create a
>mortgage does not matter.  So long as the parties intended to secure a debt
>by a certain piece of property, an equitable mortgage will have been
>created.  Express words are not required to create an equitable mortgage so
>long as the intention to create such a lien is evident." Here, it was clear
>to the Court that the couples' "intent was to use the property to secure
>money lent by [the mortgagee]." The money was directly used to purchase the
>property.  To the Court, it was clear that both the husband and wife "should
>be held responsible for this debt as both benefited." Consequently, it found
>that "an equitable mortgage was created" and entered judgment against the
>Ira Meislik
>Meislik & Meislik
>66 Park Street
>Montclair NJ 07042
>ph - (973) 783-3000 X103
>Fax - (973) 744-5757
>-----Original Message-----
>From: DIRT - Real Estate Lawyers Listserv [mailto:DIRT@LISTSERV.UMKC.EDU] On
>Behalf Of Patrick Randolph
>Sent: Monday, August 21, 2006 1:39 PM
>Subject: [DIRT] DD 8/22/06 Forged Deed, but Good Mortgage
>I had thought this was posted earlier, but couldn't find it in my files, so
>I'm using it today.  If it looks familiar, please let me know when I posted
>Daily Development for Tuesday, August 22, 2006
>by: Patrick A. Randolph, Jr.
>Elmer F. Pierson Professor of Law
>UMKC School of Law
>Of Counsel: Blackwell Sanders Peper Martin
>Kansas City, Missouri
>given on a title obtained by a forged deed normally will not avail the
>mortgagee even when it has no knowledge of the forgery, the mortgagee's
>mortgage may have some validity where the mortgage was given by a husband
>who forged his wife's signature on a quitclaim deed and most of the proceeds
>were expended on community expenses. 
>Mabra v. Deutsche Bank & Trust Co. Americas, 627 S.E. 2d 849 (Ga. App. 2006)
>Husband and wife divided their financial responsibilities.  Husband had
>responsibility for paying the mortgage on their home, and wife paid him $500
>toward the expense.  At some point, Husband falsely informed Wife that the
>mortgage was paid.  Later Husband proceeded to borrow under several
>successive mortgages in his own name.  He forged his wife's signature on a
>quitclaim deed, which he recorded, to support these mortgages.  In the end,
>the sum exceeded $224,000, which husband refinanced in one mortgage that he
>alone executed.
>Later, husband brought to wife papers for an additional loan for her to
>sign, which she did, never knowing about the forged deed or the prior
>When husband died, wife continued to live in the house and ultimately
>discovered the mortgage.  Wife brought suit to cancel the mortgage and to
>enjoin the mortgagee from foreclosing.  The trial court granted summary
>judgment to mortgagee, and the court here, in an exceedingly poorly drafted
>opinion, affirmed.
>The court began by chastising the wife's counsel for failure to follow the
>appellate briefing forms.  This makes ironic the failure of the court to
>supply us with much understanding of this somewhat remarkable outcome.
>The court acknowledged that the normal rule is that a title based upon
>forged documents is void, and that those taking interests under such void
>title have no interest, and cannot succeed even through a claim of bona fide
>purchaser status.  Nevertheless, the court concludes, in this case an
>exception should be made.  Here is the sum total of the court's analysis:
>"In her petition, Mrs. Mabra seeks the equitable relief of enjoining
>[mortgagee] form foreclosing on the property and the cancellation of the
>allegedly forged quitclaim deed.  In other words, she would like to continue
>to live -cost free- in a house that neither she nor her husband has ever
>actually owned outright.  Although Mr. Mabra told his wife that he paid off
>the mortgage, such was untrue.  And while it is unfortunate that Mr. Mabra
>essentially defrauded his wife, 'it is much more equitable that she should
>lose her land than that the innocent creditor should lose his security.'
>This is particularly true where, as here, the land was always encumbered by
>a mortgage.  Again, Mrs. Mabra seeks equitable relief, and '[e]quity seeks
>always to do complete justice.'  Although Mrs. Mabra may be entitled to some
>form of relief, we fail to see the justice in the remedy she seeks.  And as
>we find that Mrs. Mabra was not entitled to the relief sought, the trial
>court did not err in granti ng [mortgagee's] motion for summary judgment."
>Comment 1: What a terrible opinion!!!  The appeals court was irritated with
>appellant's counsel, but why take this out on the rest of us, who now must
>deal with the precedential impact of a case apparently giving relief to a
>party relying upon a forged title? 
>Comment 2: As examples of the many ambiguities in the opinion, we aren't
>told whether the mortgagee's loan represented in part a refinancing of the
>original loan to which the wife had agreed, or whether that had ever been
>ultimately paid or what happened to the other loan to which she did agree.
>Further, although earlier in the opinion the mortgagee argued that the
>proceeds of the loan had been used to "satisfy debts of the Mabras," we
>aren't really sure what this means, or whether any court found this
>allegation to be true.  Although the court says that Mrs. Mabra never owned
>title outright, it doesn't bother to tell us the nature of the title that
>she held with her husband.  Was it a survivorship estate? 
>Comment 3: There is indeed some authority for the proposition that a
>spouse's interest in marital property may be liable for debts incurred by
>the other spouse for purposes benefitting the marital community, this is a
>narrow exception to a very well established rule that normally a spouse
>cannot encumber the other spouse's property interest in marital property.
>What happened here? 
>Comment 4: Note that the mortgagee had not yet attempted to foreclose.
>Perhaps, if Mrs. Mabra gets counsel more palatable to a court, she'll be
>able to limit the scope of any foreclosure.  But foreclosure in Georgia
>typically is a private foreclosure, so she'll have to be in court once again
>seeking equitable relief.  
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